Aussie falls sharply after disappointing CPI data

US stocks rose sharply yesterday as investors cheered upbeat company earnings. Of all the companies that have released figures, most of them have beaten the consensus estimates. The majority have also upgraded or reaffirmed their forward guidance. Some of the companies that have excited investors this week are Snap, Kimberly-Clark and Twitter. As a result, the S&P ended the day at an all-time high while the Dow gained more than 150 points.

The Australian dollar declined today after the country released weak inflation data. In the first quarter, the country's headline consumer prices rose by 1.3%, which was lower than the expected 1.5%. It was also lower than the fourth quarter's 1.8%. On a QoQ basis, the prices were unchanged. The trimmed mean CPI for the quarter rose by 0.3% while the weighted mean CPI rose by a quarterly rate of 1.2%. These numbers show the challenge the Australian economy is facing. They also make the case that the country's central bank could be forced to cut rates later this year.

Today, traders will continue to focus on US corporate earnings, with companies like Boston Beer, Evercore, Facebook, Lundin Mining, and Tesla expected to release important figures. They will also focus on Germany, where ifo will release the business expectations and business climate numbers. The business climate index is expected to move from 99.6 to 99.9 while the current assessment is expected to decline from 103.8 to 103.6. The business expectations are expected to increase slightly from 95.6 to 96. Traders will also focus on the Bank of Canada, which will release its interest rates decision today. The bank will likely leave interest rates unchanged at 1.75%.

AUD/USD

The AUD/USD pair started declining on Wednesday last week, when it traded at 0.7205. Today, declines continued after weak CPI numbers. The pair’s price dropped to an intraday low of 0.7025, which was the lowest level since March 8. On the four-hour chart, this price is deeply along the lower line of the Bollinger Bands while the RSI has dropped sharply to the current level of 17. The price is also lower than all the short and medium-term moving averages. Therefore, the pair could continue to drop, to test the important support price of 0.7000.

USD/CAD

The USD/CAD pair has been gaining ahead of the fourth BOC decision of the year. It is now trading at the 1.3450 level, which is along the important resistance level shown below. On the four-hour chart, the price is above the 25-day and 50-day moving averages and is along the upper line of the Bollinger Bands. The signal line of the Stochastics Indicator is also above the overbought level. Therefore, while the pair could continue moving up, there is also a possibility that it could drop after the BOC statement.

EUR/USD

The EUR/USD pair is currently trading at the 1.1212 level, which is above yesterday’s low of 1.1190. On the hourly chart, the price is between the middle and lower line of the Bollinger Bands. It is also below the 50-day moving average and along the important support shown in red below. Therefore, at this level, the pair will likely move in either direction once the German data is released.